Anteo Diagnostics Quarterly Report - The Oak sleeps in the Acorn

Before I give an update on my thoughts of the Anteo Diagnostics Quarterly report below is a video which I feel is very relevant to many things in life but in this case applied to investing in Micro Cap stocks where one needs to dedicate time to thinking laterally about company progress as it is not as simple as looking at a cash statement to assess where the business is currently at.

The small/micro cap market is a landscape of many bright characters all with different personalities - some small companies may be profitable and growing and start being valued on future growth opportunities and potential and there are others yet to realise earnings and profitability yet these companies are still unknown as you need to assess as an investor the future growth prospects and potential and model a risk/reward based on % chance of execution over a certain period of time. I know and respect many successful investors that apply their financial acumen into valuing businesses cash flow and invest based on current and future estimated earnings per share - While there are no doubt some disciplined and successful investors that choose this path - Personally I choose to buy the sleeping ACORN before it is an OAK - I am not saying either way is right or wrong but I believe understanding your investment method and having a plan is very important. Ok enough rambling

See video below  - In summary this is all about company progress under the surface - 

The point of 1 minute 45 sec in the video will happen this year in my opinion - In the mean time all the activities currently happening and over the previous years are the events leading up to this time the Oak shoots above ground

So I will look at the individual elements of the Quarterly Report :

POINT OF CARE COMPANY 1

Progress here is excellent - POC1 who has not been formally named but looks like it is PHILIPS HEALTHCARE has been making progress towards commercial launch of their MINICARE handheld analyser into the multi billion Point of Care market first targeting the critical care test TROPONIN.

Key points from the Quarterly on POC1 

  • Anteo is being paid and in increased financial return to Anteo - previously Anteo were proving their worth where as now POC1 are paying and see value and commercial value in Anteo's time and resources result - "Increased financial return" to Anteo - my personal estimates are current development fees of $500k - $1m pa on this project - This of course due to payment terms start to see steady increases over following quarters prior to a successful commercial launch of the device if including Anteo's technology which looks more and more likely would see future annual revenues from this deal alone of as an estimate "in excess of $10m pa" as stated by the CEO some time back
  • Anteo now has access to the Biosensor surface after already providing successful data on the NANOPARTICLES - Both the Nanoparticles and the Sensor surface are critical components inside the disposable cartridge that enable successful measurement and detection
  • Discussing the relationship as "Collegial" says to me things are travelling very well and POC1 can now clearly see the value and need for Anteo's technology.
  • The POC1 summary in the quarterly finishes with "POC1 is clearly committed to the Anteo Mix&Go alternative" 
  • My summary - this partnership is now progressing and past the point of no return - The value and the need for the technology is clear - Next step I would see is announcement of POC1 

 

VERITAS - JAPANESE EXCLUSIVE DISTRIBUTION PARTNER

This exclusive distribution agreement with Veritas Corporation was announced on the 10th March and is for sale of Anteo's AMG products into Japan - a couple of points I see as interesting for this partnership :

  • Veritas is and has been the exclusive distribution partner for LIFE TECHNOLOGIES and their market leading DYNAL beads in Japan
  • Anteo slipped something very interesting into the quarterly report which I feel has flown under the radar - In the Veritas section of the quarterly CEO Dr Geoff Cumming wrote "other companies we are engaged with, such as DYNAL (Life Technologies) and LUMINEX" This is the first time that Anteo have announced as working with the market leader in the sale of beads.
  • In summary the partnerships with LUMINEX and DYNAL are a big leading indicator as to what is to come for Anteo in the future
  • Veritas has begun introducing AMG products to their customers - This will again lead to forward increased revenues
  • In summary a very good strategic partnership - HINT : Look at the DYNAL connection

 

IMRA AMERICA 

The IMRA partnership was announced on the 22nd December 2014 - with a joint partnership on gold nanoparticles.

  • Both parties happy with results of research and collaboration project and are now moving into PRODUCT DEVELOPMENT phase
  • Project shows how with an innovative partner and without corporate distractions seen with BBI Solutions a project free of distraction can move quite quickly
  • From here I see product development, testing and eventual launch
  • Very positive partnership and progress
  • Something that should be noted - These are my thoughts : Pay attention to Anteo's recent announcement of ANTEO ENERGY PTY LTD and their foray into LITHIUM ION BATTERIES - Who owns IMRA AMERICA? - AISIN SEIKI the global giant corporation owned by parent TOYOTA - Now I am wondering if they may be interested in Anteo's new company division and the potential of their Lithium Ion battery work....?
  • Final thoughts : Look deeper at this partnership - Especially the links to AISIN SEIKI and TOYOTA

 

FUTURE ANNOUNCEMENTS

Section 5 on the Quarterly report I found very pleasing and for the below reasons :

  • Previous interactions with BBI had progressed to the point just before a commercial contract and production and therefore revenues for Anteo but due to corporate restructuring with a failed IPO that caused delays - Not a refelction on Anteo as they successfully met and surpassed the objectives of their work with BBI. I think it is important to remember that this initial HOT agreement is what woke up the Anteo share price and helped propel it from the 6-7 cent region to highs of 28 cents in March 2014. The delays and doubt of this project slowly unwound the share price back to 10-14 cent range
  • Key point - It is clear progress is very much full steam again with BBI and market is yet to value any of this future potential
  • In the report was "A number of research and collaboration projects were mentioned in last quarterlies report including those with BBI SOLUTIONS / A GLOBAL LIFE SCIENCE COMPANY and a VETERINARY IVD company WE LOOK FORWARD TO MAKING INDIVIDUAL ANNOUNCEMENTS CONCERNING EACH OF THESE PROJECTS"
  • Again I look at current market cap and ask myself what is the current risk/reward and where will the share price and company potential be once these further deals are announced. Lots of progress like the acorn seed under the ground - Obvious to some but not to all.

 

BLOOD SAMPLE PRE TREATMENT PATENT

This is another huge opportunity for Anteo and the wording of the report sounds like some very large companies are already interested in a "Strategic Partnership agreement"

It is worth reading the statement from the report below to understand the opportunity. In simple terms this is talking about the plastic/glass containers every blood sample is put into every time you get blood taken - GLOBALLY this is HUGE - It looks to be treating the containers to help remove impurities from the blood sample and therefore give better results with less false negatives etc

"The pre-treatment patent addresses various sample specific interferences in IVD tests that can result in erroneous results and lead to unfavourable patient outcomes. There is a need for a simple, inexpensive, automatable and effective solution to mitigate sample specific interferences without altering or changing the sample composition. In the U.S. alone up to 10 billion laboratory tests are performed each year, and the global immunoassay instruments and reagents market is expected to reach $19.1 billion by 2018. Anteo Technologies is exploring strategic partnership opportunities to co-develop novel serum depletion products that have the potential to pre-treat hundreds of millions of patient specimens worldwide and improve the quality of reported patient results. This use of Anteo nanotechnology is applicable in traditional high throughput IVD systems, molecular spectroscopy and Point of Care sectors of the IVD market."

  • Focus on this statement - "Anteo Technologies is exploring strategic partnership opportunities to co-develop novel serum depletion products that have the potential to pre-treat hundreds of millions of patient specimens worldwide and improve the quality of reported patient results."
  • Final thoughts - This is another massive opportunity - The patent is in place protecting the process - Now they begin to look at partnering with the big players and this could be very lucrative in the future in my opinion

 

BATTERY PATENT - LITHIUM ION Hmm - That sounds interesting..

 

This is one area of recent progress that deserves some serious time and research to understand the potential of this opportunity. One only needs to research what TESLA is doing in battery and energy storage to even get a glimpse into how massive this could be for Anteo.

Here is the commentary from the Quarterly :

The “battery” patent is a truly novel yet simple application of Anteo nanotechnology. It is clear that there is significant potential in the energy field, which we aim to realise. We have established a special purpose entity with a focused budget, Anteo Energy Pty. Limited, to explore this exciting opportunity in energy.

Anteo’s coating technology provides a “drop-in” approach for developing high performance battery materials, compatible with current and near term battery manufacturing processes. Large investments in new materials and new plants are not likely to be required. Early data indicates that a successful development program has the potential to deliver batteries with:

1. Significantly higher charging capacity when compared with current batteries and competing technologies under development.

2. Better charge/discharge efficiency allowing batteries to deliver more power for longer to the end user; and

3. Significantly faster charging and longer lasting batteries. For example, the lithium ion battery market is large and growing rapidly.

Estimates place the current market size at about $30 billion pa and it is expected to increase to $50 billion pa by 2018. Key sectors in the market applicable to Anteo technology include automotive, mobile phones and tablets, laptops, power tools, toys, other portable electronic devices, defence and renewable energy storage. Automotive has the most potential for growth. 

  • In short this is massive - Anteo has been working with an industry expert in Battery technology 
  • This is not a pipe dream - Anteo have a PROVEN SUCCESSFUL DEVELOPMENT PROGRAM to increase charging capacity, increase power output, significantly faster charging
  • I think this point is worth noting as well "compatible with current and near term battery manufacturing processes" - So not just a solution for new technologies but perhaps an add in technology to improve all batteries currently produced - That's something to think about
  • I look at some other tech companies on the ASX and think if a company just had a patent and was targeting just working in LITHIUM ION battery technology - What would the company be worth? - I think the future potential here is absolutely massive and probably to date the largest and most exciting future potential for Anteo

See some videos below on Batteries you may find interesting to start your research :

 

 

FINAL THOUGHTS 

  • Anteo is now working with many companies developing and collaborating new and potential ground breaking products and technologies for use in the Medical, INVIVO and now Cleantech markets
  • The developments for the company are solid - I find it funny people who try and look at this company and try to be Warren Buffet or some expert value investor - This is a massive growth opportunity - You either see that now or invest at a latter stage when it meets your investment criteria - Different styles work for different people
  • I see nothing but a much bigger pie than when I first invested 
  • I ask myself would I buy the company today if I saw it for the first time with a 5 year venture timeframe - MY ANSWER IS A MASSIVE YES
  • And to go back to the first video in this post - We are at the point in the video of 1min 44 seconds - Lets see what happens next

 

 

DISCLOSURE : THE AUTHOR HOLDS SHARES IN THIS COMPANY. THIS RESEARCH IS NOT A RECOMMENDATION TO BUY OR SELL SHARES IN THIS COMPANY. THE AUTHOR MAY AT ANY TIME BUY OR SELL SHARES WITHOUT NOTICE. PLEASE DO YOUR OWN RESEARCH